Friday, February 10, 2012

Falling Nat Gas Prices Offset Higher Gasoline Prices

Detroit News -- "Michigan's Consumers Energy said today that its residential natural gas customers are writing checks to the utility that are down about 20 percent compared to a year ago because of a warmer winter and lower natural gas prices. The Jackson-based utility with 1.7 million customers said an average residential customer this month will pay about $146 for heat they used in January, compared to about $184 a year ago. Bills for natural gas use in December, paid in January, also were down about $28 for the average residential customer from a year earlier, according to Consumers."

From the article: 'Retail gasoline deliveries, already well below 1980 levels, have absolutely fallen off a cliff. Is the plunge inventory-related, i.e. are storage facilities so full that retailers are simply putting off deliveries?

Though I don't have data on hand to support this, I know from one of my correspondents who is in the gasoline distribution/delivery business that gasoline is very much a "just in time" commodity: gas stations are often close to running out of fuel when they get a delivery. Stations aren't holding huge quantities of surplus gasoline; that's not how the business works.

Given the absence of "extra storage" in gas stations (and the fact that the number of gas stations has fallen dramatically since 1980), it is reasonable to conclude that retail delivery is largely a function of demand, i.e. gasoline consumption.

Even if you dismiss the recent plunge as an outlier, the declines in retail gasoline deliveries are mind-boggling. If you look at the data from 1983 to 2011 on the link above, you will note that delivery declines align with recessions'...

...its residential natural gas customers are writing checks to the utility that are down about 20 percent compared to a year ago because of a warmer winter and lower natural gas prices.

Only 20%? Our winter has been very mild and the need for heating has been reduced by quite a bit over last year. I would imagine that most people are using around 20% less gas than they did last year. If the decline in natural gas were passed on why aren't bills significantly lower?

as you said, juandos, better performace of cars, also a cultural change among the young, who now text & play video games instead of cruise the strip & drag race...

Sorry but I don't buy the better performance argument. First, if you look at sales you will find that the best performing segment is trucks, not small, efficient vehicles. Second, if you look at the fleet you will find that it is getting older. That means less efficient vehicles are kept around longer.

I believe that the number of miles driven has collapsed because the real economy has contracted beyond what the BLS is reporting. People stay home because they can't afford to go out as much as they did. The nominal figures that are reported show gains but that comes from higher prices that are somehow adjusted away, not a greater volume of food being consumed.

"Chesapeake Energy Chesapeake Energy announced a plan Monday to raise $2 billion by spinning off assets from its service company and pipeline division, plus another $2 billion from upfront sales of future flows from natural gas fields, and about $6 billion from the sale of its land in the oil-rich Permian basin.

According to a column in Forbes, the plan is a desperate attempt to solve Chesapeake's financial problems. The company isn't generating enough cash because of low natural gas prices, and if prices don't rise, Chesapeake could find itself with a cash shortfall of several billion dollars, the report says."

I don't think there is any point in saying the car fleet hasn't improeved in economy becasue we are selling more trucks.

I can tell you, my trucks don't go anywhere, unless they have work to do. The mission for my trucks and my hybrid are entirely different.

Americans do like big vehicles and big engines, but they don;t kike $50 fillups.

maybe more trucks are being sold because the unemployed are are starting up service businesses, and existin businesses are finally buying new ones (depreciation schedule?)

Recently I complained to my coworkers that teh cold weather had reduced the mpg on my car. When I told them it was down to 48, they just stared at me.

"tell me about it, I'm only getting 28."

But even 28 is a lot better than 17.

Like everything else, Americans want big cars aqnd big engines, but they want them for free.

Another thing I see happening, is people downsizing their trucks. Whee you used to see an F350 pulling a stock trailier or mini excavator, now it is often a dangerously overloaded f150. Ask the guy at your trailer hitch store if he has seen any horror stories waiting to happen.

First of all, there is no homogeneous group known as "Americans", who have a single vision of what cars they want, or how much they are willing to pay for gas.

You might want to give people a little more credit for understanding that when they choose a vehicle, it may involve tradeoffs, and that their truck may not get the same mileage they would get with a Prius.

Not everyone has multiple vehicles for multiple purposes like you do, and some people may chose a single vehicle that they consider their best all around choice.

You can't tell them they're wrong, as all value is subjective.

Instead of bragging about your gas mileage, you might explain how buying, insuring, registering, and operating multiple vehicles costs you less overall than a single one, due to one of them getting excellent gas mileage.

"Another thing I see happening, is people downsizing their trucks. Whee you used to see an F350 pulling a stock trailier or mini excavator, now it is often a dangerously overloaded f150. Ask the guy at your trailer hitch store if he has seen any horror stories waiting to happen."

While I too cringe when I see what appears to be a poor match between truck and load, you should be aware that something like "bracket creep" has increase the weight ratings and towing capacities of F150s into a range previously only available in F350s.